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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Walls -v- PJ Walls Holdings Limited [2007] IESC 41 (31 July 2007) URL: http://www.bailii.org/ie/cases/IESC/2007/S41.html Cite as: [2007] IESC 41, [2008] 1 ILRM 1, [2008] 1 IR 732 |
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Judgment Title: Walls -v- PJ Walls Holdings Limited Composition of Court: Fennelly J., Kearns J., Finnegan, P. Judgment by: Finnegan J. Status of Judgment: Approved
Outcome: Dismiss | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
THE SUPREME COURT Record No. 079/05 Fennelly J. Kearns J. Finnegan J. IN THE MATTER OF WALLS PROPERTIES LIMITED AND IN THE MATTER OF THORNHILL PROPERTIES LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1963-1983 BETWEEN PATRICK JOSEPH WALLS APPLICANT/APPELLANT AND P.J. WALLS HOLDINGS LIMITED RESPONDENT/RESPONDENT JUDGMENT of Mr Justice Finnegan delivered on the 31st day of July 2007 This is an appeal against the order of Smyth J. refusing the appellant the relief which he sought pursuant to the Companies Act 1963 section 204(1) thereof. Section 204(1) provides as follows - “204(1) Subject to subsection (2), where a scheme, contract or offer involving the acquisition by one company, whether a company within the meaning of this Act or not (in this section referred to as “the transferee company”) of the beneficial ownership of all the shares (other than shares already in the beneficial ownership of the transferee company) in the capital of another company, being a company within the meaning of this Act (in this section referred to as “the transferor company”) has become binding or been approved or accepted in respect of not less than four-fifths in value of the shares affected not later than the date 4 months after publication generally to the holders of the shares affected of the terms of such scheme, contract or offer, the transferee company may at any time before the expiration of the period of 6 months next following such publication give notice in the prescribed manner to any dissenting shareholder that it desires to acquire the beneficial ownership of his shares, and when such notice is given the transferee company shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given, the court thinks fit to order otherwise, be entitled and bound to acquire the beneficial ownership of those shares on the terms on which under the scheme, contract or offer, the beneficial ownership of the shares in respect of which the scheme, contract or offer has become binding or been approved or accepted is to be acquired by the transferee company.” On the application the appellant sought the following reliefs –
3. A declaration pursuant to section 204 of the Companies Act 1963 that the respondent is neither entitled nor bound to acquire the shares (or any of them) of the applicant in Thornhill Properties Limited. 4. An order that the notice (pursuant to section 204(1) of the Companies Act 1963) dated 19th November 2003 in respect of the applicant’s shareholding in Thornhill Properties Limited served on the applicant by the respondent be set aside.” Walls Properties Limited (“Properties”), Thornhill Properties Limited (“Thornhill”) and P.J. Walls Holdings Limited (“Holdings”) are private companies in which the shareholders are members of the Walls family. The appellant holds ten ordinary shares in Properties amounting to 10% of the issued share capital and ten ordinary shares in Thornhill amounting to just under 10% of the issued share capital. The shareholding position in Holdings is somewhat more complex. The Memorandum of Association provides that the share capital of the company is €1,375,250 million divided into 1,100,000 ordinary shares and 200 12% non-cumulative preference shares of €1.25 each. The Articles of Association provide that the preference shares shall be preferential as to dividend and on winding-up as to repayment of capital but shall not confer on the holders any right to share in the property or assets of the company. The holders are entitled to receive notice of and to attend and vote at any general meeting of the company. Ordinary shares do not confer on the holders the right to receive notice of or to attend or vote at any general meetings. This share structure is reflected in the annual accounts for the year ended 31st December 2002 exhibited by the appellant. The appellant holds 20 of the 12% cumulative preference (voting) shares in Holdings amounting to 10% of those shares issued and 222,059 ordinary shares amounting to 22.2% of those shares issued. All three companies form part of a group the core business of which is construction. The core business is carried on through a number of subsidiaries of Holdings. Properties holds development and investment property. One such property relevant to this application is an office building and land at Northern Cross, Malahide Road, Dublin. Adjoining the office building and land is a site of 1.17 acres which is owned by Thornhill. On the 7th October 2003 Holdings made offers to purchase the entire issued share capital in Properties and in Thornhill, the former being valued at €20,555,000 and the latter at €100. The offer required the immediate transfer of the shares but in the case of Holdings payment of the consideration was deferred being payable by six instalments, the first to be paid on the 24th December 2003 and the last on the 30th November 2009. The offers were open for acceptance until the 17th October 2003 but this was subsequently extended to the 10th November 2003. The offers were not accepted by the appellant but were accepted by the other shareholders in Properties and Thornhill. The originating notice of motion sets out the grounds upon which the appellant sought relief pursuant to section 204(1) as follows – (a) Properties (i) The offer price was substantially below the true value of the shares. (ii) The purchase consideration for the shares was to be paid in instalments over a period of six years from the proposed date of completion during which time the shareholders would be unsecured creditors of Holdings. (iii) The time given for acceptance of the offer was of too short a duration to enable the shareholders to make an informed decision as to the offer. (iv) The shareholders were not given a valuation of the company’s worth nor any information which would enable them to reach a conclusion as to the company’s worth. (v) The shareholders were not given properly independent advice as to the offer and in particular were not advised to seek a valuation of the company’s worth. (vi) The shareholders were not informed as to the purpose of the scheme of which the offer formed a part or given proper particulars of the scheme generally. (vii) The scheme of which the offer formed part was carried into effect in contravention and disregard of the contract of pre-emption contained in the Articles of Association and the rights of the appellant thereunder. (b) Thornhill (i) The offer price was substantially below the true value of the shares. (ii) The time given for acceptance of the offer was of too short a duration to enable the shareholders to make an informed decision as to the offer. (iii) The shareholders were not given a valuation of the company’s worth nor any information which would enable them to reach a conclusion as to the company’s worth. (iv) The shareholders were not given properly independent advice as to the offer and in particular were not advised to seek a valuation of the company’s worth. (v) The shareholders were not informed as to the purpose of the scheme of which the offer formed a part or given proper particulars of the scheme generally. Except in relation to the proportion of acceptances required for the operation of the section being nine tenths in value, the Companies Act 1948, section 209(1) in the United Kingdom is identical to the Companies Act 1963, section 204(1). Decisions on section 209(1) of the Companies Act 1948 are of considerable assistance. In Re Bugle Press Limited [1961] Ch. D. 270 Buckley J. cited with approval the following passage of the judgment of Vaisey J. in In Re Sussex Brick Company Limited (a note of which judgment is appended to the report of In Re Bugle Press Limited - “I think that the applicant (the dissentient shareholder) is faced with the very difficult task of discharging an onus which is undoubtedly the heavy one of showing that he, being the only man in the regiment out of step, is the only man whose views ought to prevail.” The rationale for this is given by Buckley J. at p.276 as follows – “In the ordinary case of an offer under this section, where the 90% majority who accept the offer are unconnected with the persons who are concerned with making the offer, the court pays the greatest attention to the views of that majority. In all commercial matters, where commercial people are much better able to judge of their own affairs than the court is able to do, the court is accustomed to pay the greatest attention to what commercial people who are concerned with the transaction in fact decide.” The reference to “the 90% majority who accept the offer are unconnected with the persons who are concerned with making the offer” relates to the specific facts of the case. There, there were three shareholders, two of whom wished to acquire the appellant’s shares and had made offers for the same. The section requires that the transaction be one between companies, the transferor company and the transferee company, and does not entitle an individual or individuals to acquire compulsorily the shares of a dissentient minority. In that case, their offers having been rejected, the two shareholders wishing to acquire the appellant’s shares formed a company by which an offer was made so that the transferee company and the 90% of the transferor company’s shareholders were in effect one and the same and the section was not being used for the purpose of any scheme, contract or offer contemplated by the section but rather to enable the majority shareholders to expropriate the shares of, and evict, the minority shareholder. The transferee company was a mere screen for the majority shareholders and there was no independent majority exercising any sort of disinterested choice as to whether or not the offer should be accepted. That is not the position in the present case and accordingly the fact that the offer in issue here has been accepted by 90% of the shareholders in Properties and 90.91% of the shareholders in Thornhill is highly relevant. See also In re Hoare and Company 150 L.T. 374 on the broadly similar provisions of the Companies Act 1929 section 155(1) and In Re Press Caps Limited [1949] Ch.D. 434. In In the matter of Fitzwilton Plc 2000 (2 I.L.R.M. 263) the Supreme Court held that the onus on an application under section 204(1) in general fell on a dissenting shareholder to satisfy the court that it was an appropriate case in which to make an order and that it was reasonable as a matter of fact and established as a matter of law that the court should pay great attention to the views of the majority who had accepted the offer: see also McCormick v Cameo Investments Limited [1978] I.L.R.M. 191. However acceptance of an offer by shareholders in the transferor company who are also associated directly or indirectly with the transferee company would not carry the same weight or influence as acceptance by shareholders wholly independent of the transferee company. In the present case the shareholdings in each of the companies was as follows - Walls Properties Limited Michael Paul Walls 20 ordinary shares Susan Walls 2 ordinary shares Brendan Walls 4 ordinary shares Lynda Walls 2 ordinary shares Michelle Walls 2 ordinary shares Liam Vincent Walls 16 ordinary shares Stephen Walls 2 ordinary shares Robert Walls 2 ordinary shares Kate Walls 2 ordinary shares Aidan Walls 18 ordinary shares Ethna Elicia Walls 10 ordinary shares Dr. Patrick J. Walls 10 ordinary shares Ann Sherratt 10 ordinary shares Edward J. Walls 10 ordinary shares Total number of shares issued 110. Thornhill Properties Limited Michael Paul Walls 20 ordinary shares Susan Walls 2 ordinary shares Brendan Walls 4 ordinary shares Linda Walls 2 ordinary shares Michelle Walls 2 ordinary shares Liam Vincent Walls 16 ordinary shares Stephen Walls 2 ordinary shares Robert Walls 2 ordinary shares Kate Walls 2 ordinary shares Aidan Walls 18 ordinary shares Ethna Elicia Walls 10 ordinary shares Dr. Patrick J. Walls 10 ordinary shares Anne Sherratt 10 ordinary shares Total number of shares issued 100. P.J. Walls Holdings Limited
Total number of 12% cumulative preference (voting) shares issued 1,000,002. Total number of ordinary shares issued 200. The appellant in his grounding affidavit deposes that the prime architects of the offers are Liam Vincent Walls and Michael Paul Walls and that the majority of those who have accepted the offer are very closely linked to the prime architects. Susan, Brendan, Lynda and Michelle Walls are the adult children of Michael Paul Walls. Stephen Walls, Robert Walls and Kate Walls are the adult children of Liam Vincent Walls. Ethna Walls is a sister to the appellant and to Liam Vincent Walls and Michael Paul Walls and carries out a considerable amount of consultancy work for Holdings and its subsidiaries. The total number of shares issued in Properties is 110 of which Michael Paul Walls holds 20, Liam Vincent Walls 16, their children 16 and Ethna Elicia Walls 10 in total 62 shares. In Thornhill there are 100 shares issued of which Michael Paul Walls holds 20, Liam Vincent Walls 16, their children 16 and Ethna Elicia Walls 10 in total 62 shares. The appellant contends that the acceptance of the offers by the other shareholders by reason of these shareholdings is a sham and that there was no independent majority exercising any sort of disinterested choice. In the present case the learned High Court judge held that it is clearly distinguishable from In Re Bugle Press Limited in that there is no element of sham nor was the outcome of the offer a foregone conclusion and that accordingly the onus of proof remained on the appellant. This finding is supported by the affidavit evidence. In his affidavit sworn on the 22nd February 2004 Michael Paul Walls deposes that Aidan Walls is an independently wealthy qualified quantity surveyor project manager and property developer, Ethna Walls is a college lecturer and independent architect and Ann Sherratt an astute commercial minded person. Between them, they hold 38 of the 110 shares issued in Properties and 38 of the 100 shares issued in Thornhill. I am satisfied that the conclusion of the learned trial judge that the onus in this case rests on the appellant to show that the transaction is unfair is correct. I propose dealing with each of the grounds relied upon by the appellant in turn (i) The offered price was substantially below the true value of the shares (a) Properties -
In his affidavit sworn on the 22nd January 2004 Michael Paul Walls on behalf of the respondent explains the background and rationale behind the offers. The objective of Properties was to obtain planning permission for residential development of approximately 12.7 acres of the lands and immediately thereafter dispose of the same. An application for planning permission was made for the construction of a hotel on part of the lands and this had certain tax advantages. The sale of the site with the benefit of hotel and residential planning would most likely result in the hotel not proceeding and this would impact on further applications for residential development on the lands. Given time constraints it would have been virtually impossible for any party other than Holdings to carry out the hotel project within the apprehended time frame left for tax allowances. The offer gave effect to what could be described as corporate restructuring rather than a takeover or expropriation. In addition to the valuation to which I have referred there is a valuation carried out by Hamilton Osborne King for Bank of Ireland which values the lands at €26.4 million. There are advantages to a sale of the shares in Properties rather than a sale of the lands. On a sale of the lands capital gains tax would be payable and a distribution of the surplus to shareholders would be subject to income tax in the hands of the recipient. On a sale of the shares capital gains tax at the rate of 20% only is payable. A sale of shares results in a 20.7% higher return to individual shareholders than could be achieved on a sale of the lands at €32.12 million (the market value of the lands of Properties less the Thornhill land valuation). In order for shareholders to achieve the same return on a sale of the land as on a sale of shares a minimum price of €38.8 million would have to be obtained. Michael Paul Walls disputes the valuation of Séan O’Neill on the basis that Mr O’Neill was unaware of wayleaves affecting the lands and a failure to allow for a major surface water sewer crossing the same and for an underground car parking element. The offer actually made was on the basis of a net asset value for Properties of €20.55 million. Should the value of the land increase, any such lift in value terms would flow in any event to the shareholders in Properties in their capacity as shareholders in Holdings. The offer accordingly makes sound commercial sense and the other shareholders in Properties have seen fit to accept it on that basis. The appellant relies upon the valuation of the shares in Properties by James V. Carr who puts a combined net worth on both companies of €35,568,425 million. This valuation however does not take account of the tax advantages to the individual shareholders or of the fact that any uplift in the value of the lands will be reflected in the value of the shareholders shares in Holdings. Mr Carr’s valuation of the shares is based on the valuation of the assets of the companies of Mr O’Neill. A further complaint of the appellant is that the offer price is devalued because the same will be repaid in instalments as follows:- €10,000,000 24th December 2003 € 2,000,000 30th November 2005 € 2,000,000 30th November 2006 € 2,000,000 30th November 2007 € 2,000,000 30th November 2008 € 2,550,000 30th November 2009 From Mr Carr’s affidavit it appears that if the consideration payable to the appellant were to be grossed up to take account of this it would require an additional payment of €191,818.18 at the date of payment of the first instalment. Further, capital gains tax is payable on the full amount of the consideration in the first year and will amount in the appellant’s case to €373,636.36. However almost 50% of the purchase money will be paid in the first year and this will leave the appellant with €535,454.55 out of this instalment after payment of capital gains tax of €373,636.36. The foregoing being the evidence the learned trial judge noted as important the following – 1. What is involved is a transfer of shares not a transfer of land. 2. Prior to completion or acceptance of the offer the appellant had a 9.09% shareholding in Properties and a 10% shareholding (and also 11% of the issued ordinary shares) in Holdings. 3. If the scheme is completed the appellant will cease to hold any shares in Properties but his shareholding in percentage terms in Holdings will be greater. Not only does the appellant receive his appropriate percentage benefit in cash, as do the other shareholders but his beneficial interest in the assets of Properties will increase because of his higher percentage shareholding in Holdings. The offer is distinguishable from an outright acquisition of shares for cash only. In relation to the valuation evidence the learned trial judge said – “While understanding the argument based on valuations, it seems to me improbable that the majority of the shareholders accepted the combined worth of Properties and Thornhill at €20,550,100 million if their combined net worth was in fact €35,568,425 million…I am unable to accept the valuation figures as so definitive as not to leave great scope for differences and while mindful that the only valuation of shares exhibited is that produced by the applicant long after these proceedings issued, I cannot conclude, as invited by Mr Cush to do, that the offer is at a gross undervalue. An ex post facto valuation of shares, if it had been sought and obtained to justify the terms of the offer, could not displace the respect (not uncritical acceptance) for the views taken by the majority of the offer “package” as a whole. The fact that the majority may have relied on the views expressed by Paul and/or Liam, to whom they were related, and who were not financial analysts, does not detract from the reasonable probability that they might have considered Paul and Liam to have detailed intimate knowledge of the business and what its assets and shares were worth. While the record of Deloitte & Touche dated 25th May 2004 of the stated valuation approach adopted by Holdings in valuing the ordinary shares and properties as of September 2003 smacks of ex post facto reasoning, I cannot ignore such evidence. In the context of such evidence I do not accept that the applicant has shown that the offer is obviously and convincingly unfair.” As to the onus on an appellant in In Re Sussex Brick Company Limited Vaisey J. said –
I agree with the finding of the learned trial judge that the appellant has failed to show that by reason of the price offered and the manner of payment the offer was unfair. The appellant accordingly fails on this ground. (ii) The purchase consideration for the shares was to be paid in instalments over a period of six years from the proposed date of completion during which time the shareholders would be unsecured creditors of Holdings.
The appellant’s solicitors wrote to the respondent’s solicitors on the 15th October 2003 indicating that he would not be accepting the offers. One of the stated grounds for not accepting was that the offers were significantly lower than the market value of the shares. The appellant had decided not to accept the offer as he had formed a view as to the value of the shares and the inadequacy of the offer. Indeed, he having retained a solicitor who advised him well within the period for acceptance, I am not satisfied that the appellant suffered from a deficit of information. Further a solicitor retained by the Holdings to furnish advice on the offer to shareholders in Properties and Thornhill wrote to shareholders in those companies on the 7th October 2003 in which he indicated that if any shareholder did not wish to be advised by him they could obtain separate legal representation as indeed the appellant did. The information available was sufficient for the other shareholders.
The letter of 7th October from the solicitors retained by Holdings, Beauchamps, to advise shareholders in Properties and Thornhill drew attention to the possibility of obtaining legal advice: this advice would certainly have included examination of the transferor companies’ worth. The appellant in fact obtained independent advice. By 15th October 2003 having consulted his solicitors the appellant decided not to accept the offer. Independent advice by definition is a matter for the shareholders in the transferor companies. They are, of course, entitled to information on the offer from the Board of the transferee company and depending on the circumstances perhaps from the Board of the transferee company. In this case the appellant is a shareholder in both companies and has an entitlement to reasonable information from both. However I am satisfied that the appellant had that information both in his capacity as a shareholder in the transferor company and as a shareholder in the transferee company and that he was in a position to reject the offer having obtained legal advice by the 15th October 2003. In his solicitor’s letter of that date lack of information was not raised as an issue. The appellant fails on this ground. (vi) The scheme of which the offer forms part was carried into effect in contravention and disregard of the contract of pre-emption contained in the articles of association and the rights of the appellant thereunder. The Articles of Association of Properties deals with the transfer of shares in article 7. Article 7(a) provides as follows –
Article 7(b) to (h) set out the procedures to be followed where a member proposes to transfer a share. Article 7(j) provides as follows:-
Thus upon an attempt to transfer any share in the company the procedures set out in Article 7(b) to (h) come into operation. The appellant contends that as Holdings was not a member of Properties upon a shareholder accepting the offer the provisions of Article 7 were triggered and Properties ought thereupon to have acted in accordance with Article 7(j). It did not do so. Further to preserve his right of pre-emption the appellant issued a plenary summons on the 17th November 2003. The consequence of this, it is argued, is that Holdings in relation to shares transferred to it can take no greater interest than the transferors are entitled to pass and accordingly holds those shares subject to the appellant’s right of pre-emption which entitles him to acquire not only a number of those shares proportionate to his own shareholding but also the like proportion of those shares which have not been taken up by other members. Further those members who have transferred their shares have thereby waived their right of pre-emption and the effect of this is that Holdings could not obtain four fifths by value of the issued share capital as required by section 204 and would not be in a position to issue a notice under section 204(1). In support of the argument reliance was placed on Lee & Company (Dublin) Limited v Egan (Wholesale) Limited, the High Court (Kenny J. 27th April 1978). In that case the Articles of Association of Egan (Wholesale) Limited contained broadly similar provisions conferring rights of pre-emption. The second named defendant who owned 90% of the issued share capital in the company agreed the sale of the entire issued share capital. There were three other shareholders. The second named defendant repudiated the agreement for sale and this action for specific performance was taken. In short Kenny J. held that the plaintiff was entitled to specific performance of the agreement insofar as it related to the second named defendant’s shares only but also to damages, or alternatively, not to proceed with the purchase and seek damages only. In the course of his judgment, however, Kenny J. said that the obligation on the second named defendant under the pre-emption provisions must be complied with. The learned trial judge here had regard to the Companies Act 1963, section 25(1) which provides as follows: “25(1) Subject to the provisions of this Act, the Memorandum and Articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed and sealed by each member, and contained covenants by each member to observe all the provisions of the memorandum and of the articles.” In the course of argument before this court there was extensive argument as to the proper construction of the provisions of Article 7. However in my opinion it is unnecessary to consider those provisions in detail having regard to the clear statutory provision contained in section 25(1) of the 1963 Act. In the event of any conflict between the provisions of the Companies Acts and a provision in the Articles of Association the former will prevail. Section 204(1) of the Act of 1963 is triggered by a scheme, contract or offer involving the acquisition “of the beneficial ownership of all the shares” of a transferee company. As is clear from Lee and Company (Dublin) Limited v Egan Wholesale Limited a shareholder notwithstanding pre-emption provisions in the Articles of Association may enter into a binding and enforceable contract for the sale of the shares notwithstanding non-compliance by him with pre-emption provisions affecting the shares. Upon each shareholder accepting the offer of Holdings a binding agreement in respect of those shares came into existence. The beneficial interest in those shares passed to Holdings upon a binding agreement coming into existence. Hawks v McArthur [1951] 1 All E.R. 22, Re Hafner, Olhausen v Powderly [1943] I.R. 426 at 453 et seq. The provisions of the Articles of Association, article 7 operate as between the shareholder and the company but also between the transferor and transferee of shares to the extent that the pre-emption provisions prevent the legal estate in the shares passing: the beneficial ownership as between transferor and transferee however passes. Once the statutory proportion of the issued share capital came into the beneficial ownership of Holdings its entitlement to invoke section 204 arose. At this time the conflict between the pre-emption provisions and the statutory entitlement of Holdings under section 204 came into conflict but having regard to the provisions of section 25(1) of the Act of 1963 this conflict is resolved in favour of Holdings. It was so held by the learned trial judge and I am satisfied that he was correct in so holding. The appellant fails on this ground also. 4. The shareholders were not informed as to the purpose of the scheme of which the offer formed part or given proper particulars of the scheme generally. In dealing with the second complaint of the appellant I have quoted from the affidavit of Michael Paul Walls sworn on the 22nd January 2004. The rationale of the deferred payment structure was discussed and explained to the appellant at a meeting prior to the offers being made. At the AGM the reason for the same was explained. From that affidavit it is clear that the appellant was aware of the broad details of the proposal from mid to late September 2003. He was informed of the rationale for the offer, the site valuations and the reasons for the short notice of the EGM – related to a concern that tax benefits might be lost in the upcoming budget. The appellant was in a position to make his views on the proposed offers known to other directors of Holdings and also to some of the shareholders in Properties. He wrote to shareholders on the 30th September 2003. There were several meetings between Michael Paul Walls and the appellant prior to the EGM. A detailed statement in relation to the scheme was made at the EGM. The appellant had separate meetings with Michael Paul Walls, Liam Walls, Pat Veale a director of Holdings and Shaun Greene, financial controller of Holdings to discuss the offer. As already remarked the appellant was in a position to obtain legal advice and to form a firm decision to reject the offers by the 15th October 2003. The appellant has not satisfied me that he was not informed as to the purpose of the scheme or given particulars of the scheme generally. Accordingly on this ground also the appellant fails. Holdings dividend policy The appellant had one major and overriding objection to the scheme which led him to reject the offer. This related to the difference in dividend policy between Holdings and Properties. Properties regularly paid dividends where possible and commercially appropriate. Holdings notwithstanding its ability to do so has not declared a dividend for upwards of twenty years, save in one year only. This was an issue which concerned the appellant and also some other shareholders. In 2002 Holdings had retained profits of €2,700,000 million and net assets of €24,000,000 million and other reserves of €22,400,000 million. Liam Walls and Michael Paul Walls have control of the Board of Directors of Holdings and the appellant’s concern is that this policy on dividends will continue. It is important to note that this concern is one shared by other shareholders in Holdings. Notwithstanding this other shareholders have accepted the offer. This to me is significant. Also significant is the circumstance that the scheme allows the release to the appellant and the other shareholders in Properties of a substantial amount of cash so that the dividend policy in Holdings in the future. Should the policy continue, is unlikely to give rise to the same contention within Holdings. It is, of course, the entitlement of individual shareholders to continue to raise their concerns at Board level, if members of the Board, or at general meetings. The appellant’s concern, and indeed his sense of grievance, at the dividend policy is readily understandable. He is a medical doctor. He is not engaged in the day-to-day running of the Walls companies. Other members of the family are and while he does not so depose I would assume that they received reasonable remuneration. Whatever else may be said about the dividend policy in Holdings it is not designed to achieve family harmony. If the policy should continue and is oppressive it may be that other remedies are available to a dissatisfied shareholder. Having regard to the shareholding of the appellant in Properties he could not on his own ensure that the dividend policy which he favours would continue indefinitely. The correct approach for the court is to have regard to the interest of all the shareholders in Properties. The heavy onus on a dissenting shareholder must also be borne in mind. Taking these matters into account the historical dividend policy of Holdings which contrasts with that of Properties, has not been shown by the appellant to be unfair. For the foregoing reasons I am satisfied that the appeal must fail. Patrick Joseph Walls v P.J. Walls Holdings Ltd | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
